Conventional marketing wisdom asserts that consumer packaged goods (CPG) companies can't build real consumer loyalty because consumers tend to be driven by price and habit. But if that's true, why are so many CPG firms exploring customer relationships and launching loyalty programmes?
According to a white paper from Carlson Marketing, that conventional wisdom concerning CPG loyalty initiatives has been overturned. CPG companies are now starting to view relationship marketing as a natural extension of their mass market brand building efforts.
Consumers do want CPG relationships
Carlson's research found that consumers actually do want relationships with CPG brands, and that the key to those relationships is a concept called 'engagement loyalty'.
Engagement loyalty is a blend of traditional advertising, B2B and partner relationships, and interactive marketing, all designed to attract participation in branded experiences and communities.
A fair exchange of value
However, the concept of a loyalty currency changes significantly within an engagement loyalty programme. Instead of (or even in addition to) exchanging points, miles, or discounts for repeat purchases, engagement loyalty efforts offer consumers fair trades, For example, in exchange for the consumer's information, time and attention, the company offers to:
- Tell you some secrets (distribution of useful information);
- Allow you to participate in our business and interact with other participants (a community of end users);
- Give you a backstage pass (a brand-related experience of some kind).
Consumer attention is key
Consumers' time and attention has become the new battleground for CPG manufacturers that are trying to build engagement and loyalty in an increasingly crowded marketplace. As Tom Davenport wrote in his book, The Attention Economy: "Understanding and managing attention is now the single most important determinant of business success."
Interestingly, one of Carlson Marketing's earlier research papers examined the soft drink market with a view to identifying the factors involved in engagement loyalty to the sector, and the three main findings included:
- Behavioural and emotional loyalty does exist
Consumers have favourite brands, and drink those brands more than others. Over 70% of respondents claimed they "always" or "almost always" drink their favourite brand of soft drink. This indicates a substantial amount of brand loyalty.
- Consumers engage with favourite brands in different ways
When looking at respondents' past interactions with their favourite brands, it appeared that most had made recent purchases from a store (86%), restaurant (49%), or vending machine (38%). But a significant number also indicated that they had visited their favourite brand's web site (15%), redeemed a coupon (15%), or participated in the brand's loyalty programme (9%).
- Consumers are interested in new ways of engaging with brands
Most consumers said they were interested in engaging in more economic-based activities such as entering sweepstakes, receiving discounts, or joining loyalty programmes in which they have the potential to earn a monetary reward for their time and attention. These loyalty incentives are gaining momentum.
The new report ('Building Relationships for CPG Brands: Engagement Loyalty: Part Two') and the earlier report ('A New Lift for CPG: Engagement Loyalty') can both be downloaded from the Carlson/1to1 Media web site:
- Download Part One - click here (PDF, free registration required)
- Download Part Two - click here (PDF, free registration required)